Rwanda’s economy gains S&P outlook status

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Rwanda has earned Standard and poor’s (S&P), a corporate and sovereign rating agency, revised outlook to positive from stable and maintained the rating at B/B for long and short term.

The rating, by the American independent credit rating agency, was released on August 10, 2018.

Rating agencies like S&P are always non-governmental institutions or independent institutions with international credibility and skills to measure the credit worthiness of a country by assessing their ability to repay with interest debts to creditors.

The Opinions and analyses of rating agencies are informed by a set of factors, including current debt levels, economic policies under implementation, which are important reference points used by investors and development partners for strategic decision making.

According to the Agency, the latest rating was influenced by the country’s external adjustment policies whose objective is to reduce external financing needs and shore up foreign exchange and also higher exports of non-traditional goods, including gemstones, textiles and agro-processing.

The 2015-2016 balance-of-payments shocks forced Rwanda to implement external adjustment policies supported by an 18-month International Monetary Fund (IMF) standby credit facility (SCF) of $204 million.

A statement released by the S&P, said it would look to take a positive rating action if Rwanda’s economic performance is materially stronger than its projections compared with peers.

S&P said that the current account balance will moderately decrease towards 2019, notwithstanding it anticipates that upcoming investment projects, higher exports and consumption will support stronger medium-term growth prospects.

However, S&P long-term rating on Rwanda remains at ‘B’, reflecting low GDP per capita levels of less than $1,000 and the debt accumulation to fund infrastructure projects.

The rating reflects the assessment that the Government will retain net debt levels moderate at around 45 per cent of GDP by 2021.

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